Urban Climate Change Adaptation - Catalysing the Private Sector

8/3/2019 Urban Climate Change Adaptation - Catalysing the Private Sector

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2011 Intellecap. All rights reserved

www.intellecap.com

Urban Climate Change Adaptation Catalysing the Private Sector

Financing Future Cities, Asian Urban Forum 2011, ADB (Nov 17, 11)

Manju Mary George, Intellecap


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Rockefeller Foundation and Intellecap: Study Questions

What are the vulnerabilities a changing climate poses for the urban poor?

Is there a case for private sector participation in build their resilience to

cope with these vulnerabilities?

What can be done to support private sector involvement?

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Bangkok Floods the latest reminder of the climate vulnerabilitiesfacing Asian cities

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The poor in these cities are the most vulnerable to such risks; helpingthem adapt is critical

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Asian cities are expected to

account for more than 60% of

global population growth in the next

30 years creating immense

pressure on urban infrastructure


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Case: Rag pickers and waste management, Surat, India

Ironically this is a group that is responsible for cleaning up the city, improving sanitaryconditions

Exposure to toxins and hazardousmaterial

Poor working conditions

Incomes fall by a factor of 4 during themonsoons

Exploited by middle men

Irregular incomes

Illegal slums

Poor living conditions

No social security Not part of the formal economy

Pariah of society

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2011 Intellecap. All rights reserved 6

Funds required for CCA by 2015 Source of funds for CCA

Climate

proofing

infrastructure

($ 40 bn)

Protecting

poor against

climate

change

($ 44 bn)

Strengthening

Disaster

Response

($ 2 bn)

Govt self-

expenditure

(0.5% of GDP

of all L&MIC*)

Private sector

funds:

1) investment,

2) self-finance,

3) philanthropy

Aid from

OECD

countries

(10x of

current)

Total: $ 42 bn

* Lower and Middle Income Countries. Source: Human Development Report 2007/2008: Funding Climate Change, UNDP

Private sector funds are critical to help build resilience of the Asiancities and their poor

Total: $ 86 bn


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Private sector businesses and investors have opportunities to createblended financial and social returns

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Business Activity

Corporation

Social Enterprises

Investments

Commercial Investors

Social Investors


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Business opportunities to build resilience amongst the poor existacross sectors

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Reduced Food & Water Security

Decline in Sanitary Conditions

Life & Asset Loss

Loss of livelihood

Disease and health issues

Impact on Energy supply

Water Management

Waste Management

Affordable Housing

LivelihoodPromotion

Affordable Healthcare

EnergyManagement

Microfinance

Micro-insurance

Technology


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2011 Intellecap. All rights reserved 9

Illustration: Rag pickers can ensure better waste management anddrainage, while increasing their incomes

Equity/ DebtIntegratedWaste Mgmt.

Company

Rag Pickers

WasteProcessing/

Recycling

Revenues Waste

WasteCollected/Segregated

Regular Income % of profit

Credit Support

HouseholdCollection

Waste

RevenuesHousehold

monthlyfees

CommercialCapital

Better Drainage and Waste

Management in Surat

Increase in Income for Rag Pickers


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Many social entrepreneurs and investors in India areparticipating in these emerging opportunities

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3 S/Shramik (www.3sindia.com) GV Meditech (www.gvmeditech.com)

Kanak Skymet (www.skymet.net)


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Climate Change increasing frequency andseverity of deadly floods in Jakarta

Case: Flood micro-insurance pilot in Jakarta

Need for Micro Insurance Flood Cover

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Private sector insurers, Munich Re, Asuransi Wahana Tata, GTZ, piloted flood insurance in sub-districts of

Jakartato provide economical and simple-to-understand flood insurance to low income households.

If water level reaches or exceeds 950 cm, a one off payment of Rp 250,000 can be obtained per card

Despite an innovative product, the scheme faced a lukewarm response onaccount of the following:

Design Issue: Flood instances vary; payments not enough

Adverse selection: High risk individuals buy insurance; buy at 5-year cycle

Basis Risk: Payouts not commensurate to expected loss

Poor consumer awareness: unwilling to pay; mistrust of insurance company

Feasibility challenges: High transaction costs; low volumnes

Water level measurement Manggarai gate


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Many market-making efforts are needed to realise theseopportunities

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Opportunities in emerging and under-developed pro-poor sectors

Trigger is business opportunity or social impact; resilience not an understood goal

No magic bullets need solutions that are context specific, creates redundancies

Local issues call for local innovation; social entrepreneurs likely to lead the way

Limited engagement owing to poor awareness of issues and opportunities

Relevant data on poor for business functioning is not widely available

Climate change impacts on rural poor more direct and relevant in peoples minds; Urban

resilience needs more nuanced approach

Focus on mitigation overshadows adaptation/resilience building discussions

Limited willingness and capacity to pay

Funding for enterprises in the space has been limited


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Way Ahead: Market making for building resilience to climate change inAsias Cities

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Showcase the role businesses have played in urban resilience building

Identify and promote champions among key private sector segments

Demonstrate proof of concepts in vulnerable cities; encourage businesses to engage

Engage the funders patient capital to commercial capital

Integrate resilience building agenda into government and city development plans

Influence policy to create a facilitative eco-system for urban resilience building


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Thank You


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There are many more cities across Asia vulnerable to climate changeimpacts

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Photos: blog.ratestogo.com; holidayiq.com. Text: Intellecap research

Surat, the worlds diamond capital, is wedgedbetween the Tapti River and the Arabian Sea.

Its in danger of climate change induced floods

and seal-level rise.

Climate Change isexacerbating:

Poor sanitary conditions

Malaria incidence

Water scarcity

Loss of livelihoods

Urban Climate Change Adaptation - Catalysing the Private Sector

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